|
VECCI's latest Business Trends and Prospects Survey shows that the short-term outlook for the Victorian economy is more positive among businesses located in regional Victoria compared with those located in metropolitan Melbourne.
VECCI's Chief Executive Officer, Mr Neil Coulson, says the overall results of a survey of a cross-section of Victorian businesses revealed an improvement in trading conditions over the December quarter 2003, with stronger general business conditions, sales, selling prices, employment, exports and investment. This was offset by flat profitability, reflecting strong wages growth and rising insurance premiums during this period.
However, regional respondents reported more robust business conditions than their metropolitan counterparts across most key indicators of business performance. On a net balance basis, 28 percent of regional businesses reported improved general business conditions over the December quarter 2003, as opposed to 18 percent of metropolitan-based respondents reporting an improvement in this indicator.
Regional Versus Metro Business Performance - At a Glance
|
Business Indicator - Net Balance December Quarter 2003 * |
Metro % |
Regional% |
|
General Business Conditions |
18 |
28 |
|
Sales |
22 |
28 |
|
Exports |
-1 |
18 |
|
Wages Growth |
32 |
39 |
|
Other Labour Costs |
28 |
31 |
|
Selling Prices |
2 |
14 |
|
Profits |
-4 |
7 |
|
Employment |
8 |
7 |
|
Overtime |
9 |
12 |
|
Buildings and Structures Investment |
-1 |
17 |
|
Plant and Equipment Investment |
6 |
22 |
*
Net balance basis represents the difference between the proportion of businesses reporting an improvement and those reporting a deterioration.
Despite reporting a higher rate of growth in wages and other labour costs, regional respondents reported stronger growth in sales, exports, selling prices, profits, overtime and investment than did their metropolitan counterparts. However, regional respondents reported comparatively weaker employment growth.
Regional respondents were slightly less optimistic than their metropolitan counterparts with regard to future growth prospects for the Australian economy, with a total of 34 percent anticipating stronger growth for the forthcoming twelve months. The corresponding figure for metropolitan businesses was 36 percent.
However, as can be seen from the chart below, regional respondents were more optimistic than Melbourne based businesses regarding the growth outlook for the Victorian economy, with a total of 26 percent of surveyed regional businesses predicting the State's economy will experience stronger growth over the next year. By comparison, 21 percent of businesses from metropolitan areas forecast stronger growth in the Victorian economy over the next twelve months.
Of the 500 survey respondents, 60 percent were located in metropolitan Melbourne and 40 percent were located in regional Victoria.
"While the survey results have a silver lining for regional Victoria, there is a marked divergence in outlook between those predicting stronger growth in the Australian and Victorian economies.
"Victoria's economy has also recorded below-average output growth over 2002/03. For Victoria to continue to prosper, the business climate must be fostered - vital infrastructure projects such as channel deepening in Port Phillip Bay and key regional road and rail projects must be tackled expeditiously and business taxation relief must be provided in the next State Budget to ensure our continued competitiveness with other States", says Mr Coulson. | 
